AN OVERVIEW OF VIRTUAL REALITY IN SOUTH AFRICA - PART ONE - SHAPING THE INDUSTRIAL LANDSCAPE THROUGH TECHNOLOGY - IQbusiness
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IQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
AN OVERVIEW OF
VIRTUAL REALITY
IN SOUTH AFRICA
PART ONE
SHAPING THE INDUSTRIAL LANDSCAPE THROUGH TECHNOLOGY
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Copyright © 2018 IQbusiness
IQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
INTRODUCTION
“VR WAS ONCE THE DREAM OF SCIENCE FICTION. BUT THE INTERNET WAS ALSO
ONCE A DREAM, AND SO WERE COMPUTERS AND SMARTPHONES. “
-MARK ZUCKERBERG
The last decade has seen the world become more virtual; in fact, the Focusing on Africa, and in particular South Africa, we have demonstrated
word ‘virtual’ has become one of the most frequently used words in the the ability to leapfrog technology development and adoption while
English language. Our daily environment is dominated by virtual training, profiting from global learning from a hardware/software perspective
virtual universities, virtual offices, virtual pets, virtual exhibitions, virtual within the VR space. This ability forms the foundation for solid prospects
museums and many more. Every experience possible suddenly has a for VR in South Africa as well as the broader African continent.
virtual dimension. Every physical possibility has been complimented by
a digitized dimension. It is believed that over the short to medium term, VR technology
including its derivative content application and services will have the
Since the early days of low resolution transmission, which were not too same transformative potential as television, computers, the Internet,
long ago, the VR landscape has already evolved, and functionality that and smartphones for South Africa. VR is adaptable, flexible, powerful
was thought not to be possible has become a reality. The majority of and will impact the way we work, entertain, and socialise in the very
phones are now smartphones; connectivity is omnipresent as we are near future.
connected anywhere and anytime. Computers are not only smaller
but have greater processing power and anyone is able to purchase Quick adoption of technology and the fitting use case goes hand-in-
a notebook or tablet at an economical price. Additionally, as other hand, South Africa may need to undergo a learning curve before these
technologies have increased in quality while decreased in price, the technologies are entirely adopted. It is essential for businesses to assess
same trend has been noted in VR. Devices such as the Oculus Go are not which use cases will ensure long-term, successful technology adoption,
only affordable, but deliver excellent visual quality, with the additional and picking the correct technology partner will form a critical part of
benefit of large amounts of content to choose from. this exercise. This report provides a high level view of the potential use
cases for VR in the current South African market.
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IQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
TERMS OF REFERENCE
VIRTUAL REALITY (VR)
A combination of video and audio, viewed via a headset, filling a single person’s field of view that creates the illusion of being in the generated en-
vironment. Any head or hand controller movements will result in visual and audio changes in the headset, creating a complete sense of reality. VR
allows the interaction between objects and people, tactile interfaces allowing objects in the virtual world to be manipulated. VR experiences can
be undertaken individually or in a social collaborative environment, with individuals being able to interact with each other while being immersed
in the environment.
AUGMENTED REALITY (AR)
Not to be confused with VR, AR has a very different purpose to VR. In this case an AR device is used to overlay 3D images onto the user’s view of
the real world. Examples include the Microsoft HoloLens which is an AR system, and Pokémon Go which successfully used AR in a commercial ap-
plication.
360° VIDEO
Using a special video recording technology camera, images are recorded in a continuous 360° image. This allows the user to navigate and engage
in the environment, having a full 360° view of the surroundings. Some interaction can be included in the viewing experience.
UNTETHERED VIRTUAL REALITY
Your typical VR devices such as the Oculus Rift and HTC Vive use a headset that is connected to a laptop or PC via a cable. As this cable restricts the
physical movement of the participant, there are more recently released devices such as the Oculus Go that are completely mobile.
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IQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
WHY SOUTH AFRICA?
ECONOMIC GROWTH
Economic growth has been driven by trade, tourism and
communication.
South Africa is quickly becoming a knowledge-based
economy focused on technology, e-commerce and
financial services.
South Africa has the largest economy in Africa, with an
estimated Gross Domestic Product (GDP) of $295 billion.
POPULATION STATS ADDITIONAL FACTORS
South Africa has a population of 55.9 million - 57.06
The gaming industry has grown from R29.7 million to
million. R100 million since 2015.
21 - 31 million South Africans are Internet users. Netflix will have more than 337 thousand subscribers in
South Africa in 2020.
29 million people in South Africa make use of
South Africa has a 44,6% high school drop out rate.
smartphones.
These statistics reflect that there is opportunity for swift advancement in technological literacy, a heightened understanding of
consumer behaviourand an appropriateness for technological intervention within the South African landscape.
Source: Hootsuite/we are digital, Digital in 2018, January 2018
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SOUTH AFRICAN OPPORTUNITY
Below is a comparative view of South Africa’s digital footprint, as an indicator of
perceived readiness of the market towards VR (January 2018):
GENERAL POPULATION VIEW
Global Africa South Africa
Population 7.593 Billion 1.272 Billion 57.06 Million
% Urbanisation 55% 42% 66%
Median Age 30.6 19.5 27.4
Literacy % (total) 84% 78% 94%
GDP Per Capita (US$) $15,000 $1,450 $13,248
Internet Users 4,021 Million 435 Million 31 Million
- Internet Penetration 53% 34% 54%
Active Social Media Users 3,196 Million 191 Million 18 Million
- Social Media Penetration 42% 15% 32%
Unique Mobile Users 5,135 Million 1,040 Million 38 Million
- Mobile Penetration 68% 82% 67%
DEVICE USAGE OF ADULT POPULATION
South Africa
Smartphone 60%
Laptop/Desktop Computer 24%
Tablet 12%
Television (any type) 82%
Device to stream Internet content to television 3%
Average daily time spent using the Internet via any device 8H32M
Average daily time spent viewing television, Broadcast streaming, or Video on Demand 3H00M
Source: Hootsuite/we are digital, Digital in 2018, January 2018
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SOUTH AFRICAN OPPORTUNITY
FINANCIAL INCLUSION FACTORS % of population 15+ (survey data)
Global South Africa
Has a bank account 62% 70%
Has a credit card 18% 13%
Make online purchases/pay bills online 17% 8%
ATTITUDE TOWARDS DIGITAL % of adult population using a device (survey data)
South Africa
Believe that new technologies offer more opportunities than risks 66%
Prefer to complete tasks digitally whenever possible 61%
Source: Hootsuite/we are digital, Digital in 2018, January 2018
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DIGITAL OPPORTUNITY
Nearly 40% of total entertainment and media consumer spend in South Africa will
be derived from Internet access revenue in 2021.
As mobile Internet penetration increases growth in Internet access revenue will naturally slow somewhat. Mobile Internet penetration was mea-
sured at 52.3% in 2016 and is expected to rise to 77.8% in 2021. Overall, digital revenue’s share of entertainment and media spend is already at
38%, and will rise to 49% in 2021 – still short of the symbolic tipping point of over 50%.
Digital revenue is the greatest contributor to the large majority of growth, rising at a combined Compound Annual Growth Rate (CAGR) of 11.3%
to 2021. Non-digital revenue, by contrast, will rise at a 2.2% CAGR, contributing just R9.2 billion of the R45.2 billion additional revenue in the next
five years.
CONSUMER SPEND South African Entertainment & Media Spend
South Africa will see a CAGR of 7.2% for consumer revenue
over the forecast period, rising from R87.4 billion in 2016 to
49%
48%
46%
R123.7 billion in 2021. Unsurprisingly, the largest contribu-
44%
42%
tor will be Internet access, with a 48% share in 2016 rising
39%
39%
38%
to 56% in 2021.
38%
37%
35%
34%
32%
30%
Although the Internet has created an expectation of free
29%
28%
content for consumers, there are pockets of extremely
25%
24%
23%
successful consumer revenue opportunities enabled by its
20%
proliferation – from Subscription Video on Demand (SVOD)
and music streaming to the swiftly expanding social/casual
gaming environment and new VR market.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Internet access share
of E&M spending
Total digital share
of E&M spending
Source: PWC, Entertainment and media outlook: 2017 – 2021, An African perspective, September 2017
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VR IN SOUTH AFRICA TO DATE
“Our predictions were wrong: a year
ago we were saying that VR equipment
was not going to be a mass consumed
product…the speed of adoption has
been amazing!”
– Ulric Grech-Cumbo, CEO of a cinematic VR content studio in Johannesburg
VR already has a presence in South Africa, with its uses in gaming and entertainment being the
foremost areas of its popularity in the country. Certain providers have also seen excellent value
in the use of VR for training purposes, specifically in the corporate sphere, and in areas where
the task environment is hazardous, or presents the risk of damage to assets or profit margins. VR
enables the user to be presented with real life scenarios under non threatening circumstances.
For example, the Naledi3d Factory, a company making use of customisable VR solutions in South
Africa, reports successful use of VR in training people in the forestry industry in the wider South-
ern African region. They report using VR for skills development, particularly in local mines, as well
as supporting the development of rural communities.
Sectors such as corporate education, tourism, and real estate have helped South African VR con-
tent developers gain traction in the industry. However broader applications and more cost effec-
tive options need to be developed.
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LOCAL OPPORTUNITY
By 2021, the South African consumer VR content market will be worth R455 million
– reflecting a CAGR of 72.6% for 2016 – 2021.
VR reached local consumers only in 2016, which causes
almost the entire VR market to be in its infancy. This means
that South Africa will not have any legacy issues, ‘problem
children’ or false starts to look back on. However, this does VR Revenue Growth in South Africa
make for a potentially immature market with few users,
underdeveloped business models, unreliable hardware
and lots of experimental or subpar content.
Markets such as South Africa, have a relatively small
gaming market and a less competitive telco and pay-TV 182.8
environment compared to other more mature countries.
152.3 455
The consumer VR content market is projected to be worth
R455 million by 2021, a CAGR of 72.6% over the forecast
367
period. R282 million of this will be spent on VR video, at a
CAGR of 161.7%, which represents 61.8% of overall content 305
spend in 2021.
212
However, many developers, for example, Cape Town based
Virtual Reality Marketing, are looking to business clients 20.4 23.9
84 43.8
to pay the bills, developing VR and ultimately Augmented 30
Reality (AR) applications for specific verticals like retail,
automotive and healthcare. 2016 2017 2018 2019 2020 2021
Total VR Revenue Year on Year
(ZAR millions) Growth (%)
Source: PWC, Entertainment and media outlook: 2017 – 2021,An African perspective, September 2017
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EMPLOYMENT PER INDUSTRY
According to the results of the latest labour force survey,
the largest employing industry in South Africa is the
Community and Social Services Industry. This industry is Employee Count per Industry in
largely made up of government departments. Education
South Africa (2017)
and Healthcare employment are included in this segment.
There are around 490 000 active Private Security employ- 3691
ees in South Africa, working in armed response, cash-in-
transit, and guarding. 3240
The Manufacturing industry employs approximately 1,8
million people while the Mining industry employs 411
Employees (thousands)
000 people. People employed under private households 2373
include domestic workers, nannies, gardeners etc.
1791
Roughly 16.66 million people reported to have done some
form of remunerative work during the course of 2017.
1390
1270
1001
849
411 490
AVERAGE TRAINING BUDGET
149
6
PER SELECT INDUSTRIES
Other
Utilities
Mining
Private Security
Agriculture
Manufacturing
Transport
Private Households
Construction
Finance
Community & Social Services
Trade
HEALTH
R 64,027,333 ($5,015,260)
MANUFACTURING
R 119,740,000 ($9,379,234)
MINING
R 324,500,000 ($25,418,085)
Source: Statistics South Africa, Labour Force Survey Q4 2017; Securex 2017
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INDUSTRY OVERVIEW
Contribution to South African Economy by Industry
Agriculture: 2.35%
Personal services: 5.96%
Mining: 8.06%
General government services: 16.95%
Manufacturing: 13.73%
Electricity, gas and water: 2.30%
Construction: 3.90%
Finance, real estate and
business services: 22.09%
Trade and accommodation: 15.27%
Transport, storage and communication: 9.38%
From this data we can see that the top three contributers are:
1. Finance, real estate and business Services 22.90%
2. General government services 16.95%
3. Trade and accommodation 13.90%
Despite the fact that mining is a vast source of employment in South Africa its overall contribution to the economy is a mere 8.06%. Similarly, the
Agriculture industry contributes largely towards informal employment however it only 2.35% to the South African economy.
Source: Statistics South Africa, 2017 GDP data
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TOP 5 INDUSTRIES RIPE FOR VR
Based on research conducted the 5 industries below are the top industries
that VR should focus on:
EDUCATION HEALTHCARE SECURITY/MILITARY
PUBLIC AND PRIVATE
MINING MANUFACTURING
We will elaborate on each industry further in detail throughout the upcoming sections of this report.
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EDUCATION
Opportunity for investment in the South African education system is split
between two very distinct spheres: public and private. The structure, funding and
opportunities of each will be described in more detail later. The general overview
from an investment perspective is as follows:
PUBLIC SCHOOLS PRIVATE SCHOOLS
Approximately 23 500 schools; 26 tertiary Approximately 1 500 schools; over 100 ter-
institutions
tiary institutions
Average annual school fees for primary or Average annual school fees for primary
secondary school are between R32 000 - schools are about R80 000 ($6358).
R40 000 ($2543 - $3179)
Average annual fees for tertiary eduction Average annual school fees for secondary
are R54 000 – R65 000 ($4291 - $5166)
schools are about R136 000 ($10809).
Funding for primary and secondary pub- Funding for private education is sourced
lic education is catered for in the budget from fees, various private investors and
for Basic Education, while the funding for private education companies’ benefactors
tertiary education is under the budget for
Higher Education
Sources: Unite4Education. (2016). Online. BusinessTech. (2017). Online.
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EDUCATION
Government spending on combined national and provincial basic education (or
consolidated basic education) for school children remains at 17% of total government
expenditure. According to studies conducted by Unicef there are concerns about the lack
of growth in education expenditures over the medium term.
“Basic education remains a key focus in the 2018 budget,”
-Malusi Gigaba (former Finance Minister) during the Budget Speech in February 2018.
SOME KEY TAKEAWAYS FROM THE SPEECH INCLUDE THE FOLLOWING:
R246.8 billion Total basic education allocation
R24.2 billion Goods and services
R12.6 billion Capital spending
R15.3 billion Providing printed and digital content for learners and students. This includes the provision of 183
million workbooks and textbooks, teacher support aids, and increased access to information and
communication technology.
Sources: Unicef. (2018). Online.; IOL, (2018). Online.
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EDUCATION
South Africa boasts some of the strongest performing universities on the African continent. In 2003, the higher education system was restructured
to provide additional access to tertiary education and rectify historical imbalances. Smaller universities and technikons were amalgamated into
larger institutions to form comprehensive universities. South African universities offer a combination of academic and vocational diplomas and
degrees, while the country’s universities of technology focus on vocationally oriented education. These institutions retain their autonomy and are
governed by their own internal councils, however are state subsidised and fall within the ambit of the nation’s Higher Education Act.
Fees
Grants
Other
23%
32%
6%
45%
Education spend makes up approxi- Tertiary education
mately 6% of South Africa’s GDP. funding allocation
#FEESMUSTFALL #BUDGET2018
In 2015, the #feesmustfall movement erupted at uni- Post school education and training is the fastest
versities across South Africa, demanding free educa- growing spending category in the 2018 budget, with
tion for all. The protests escalated to demonstrations an anticipated annual average growth rate of 13.7%.
and violent riots at some campuses. At the beginning The 2018 budget allocated R324 billion to higher
of 2018, former finance minister Malusi Gigaba an- education and training in total - of this, the budget
nounced that R57 billion had been allocated to fund committed R56 billion over three years towards free
free education for students who come from poor or higher education. While fee-free education is socially
working-class families with a combined income of commendable, cutting fees from funding education
R350 000 or less. This was surplus to the R10 billion will no doubt affect the total education budget. The
that was provisionally allocated in the 2017 budget. state will have to source almost R22 billion to com-
pensate for the gap.
Sources: Andersen, N. The South African. (2018). Online.; StatsSA (2017). Online.
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EDUCATION
Responses to South Africa’s education issues – from inequality in the system to fears around #feesmustfall – range from the demand for outright
privatisation of education and the withdrawal of the state, to various versions of market-friendly policies and public-private partnerships. The pri-
vate education market is, however, growing rapidly. Fund manager Paul Theron from Vestact South Africa says it’s a good time to get into the pri-
vate sector, as there is going to be a “listings boom” in response to government’s struggle to reform education.
The market for private education to develop is promising, with plenty of room for expansion. Currently, private schools can only cater to around
5% of school-going aged children, thus there remains plenty of scope for growth.
The anxiety after #feesmustfall and the reform of government expenditure in the tertiary education space, caused a spike in interest in the tertiary
education businesses.
Private education has previously appealed to the wealthier members of the population, meaning that there is major consumer pressure to estab-
lish affordable private schools.
The biggest players in the private education space:
PEMBURY LIFESTYLE GROUP ADVTECH CURRO
Market Cap Market Cap Market Cap
R 164.24 million (as of 17 April 2018) R 8.87 billion (as of 17 April 2018) R 13.5 billion (as of 17 April 2018)
Number of Schools Number of Schools Number of Schools
11 open currently, 1 primed to open 82 schools and 28 tertiary institu- 31 Curro Schools open currently,
in 2019 tions with an aim to have 80 schools, ac-
commodating 80 000 learners, by
2020
Offerings Offerings Offerings
Pre-primary, Primary and High Pre-primary, Primary, High Schools; In addition to Curro Schools, Curro
Schools. The Pembury Lifestyle Private Colleges and Institutions. The has Select Schools, Academy
Group has a multipronged approach, Advtech Group owns an astound- Schools, Meridian Schools and Castle
however, also offering investment ing number of education brands in Schools, which reach all levels of ed-
into retirement villages. South Africa, some of which having ucation, including tertiary.
been acquired by Advtech once es-
tablished, and others having been
formed by Advtech.
Sources: Forbes. (2017). Online. BusinessTech. (2017). Online. Pembury. (2018). Link to Pembury. Ad-
vtech. (2018) Link to Advtech; Curro. (2018). Link to Curro.
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HEALTHCARE IN SOUTH AFRICA
According to the World Health Organisation (WHO), Africa carries 25% of the world’s disease burden, but houses only 3% of doctors internationally,
produces less than 2% of all medications consumed on the continent, and spends only the allocated 1% of the global healthcare budget . There is
opportunity for VR applications to be used for routine diagnostics and treatments not requiring the presence of a physical doctor may significantly
contribute to Africa’s wellbeing.
Despite that South Africa has some of the best medical infrastructure on the African continent, and doctors whose skills are on par with interna-
tional standards, the healthcare sector was ranked last among 19 nations in its ability to deliver maximum healthcare results at the lowest possible
cost. This came from a 2017 global survey that measured healthcare system efficiency.
Not unlike the education system, the South African healthcare sector sees a rift between the private and government sectors, with investment cap-
ital seated predominantly in the private sector. Private sector partnerships and collaborations are likely to be the most fertile locus for innovation.
The public sector provides healthcare for 80% of the population,
whereas the private sector provides for the remainder.
80% 20%
NGOs 2%
Interestlingly enough, despite providing healthcare for the majority of the population - the
Public public sector’s proportion of spend is only 48% of the total healthcare spend within South
Private
48% Africa.
50%
It is evident that the private sector has got the capital for investment and development
purposes, the majority of this capital (81%) is sourced from private prepaid schemes.
Proportion of spend on healthcare in
South Africa by sector
3 BIGGEST PRIVATE HEALTHCARE SCHEMES IN SOUTH AFRICA
Discovery Health Bonitas Medical Fund Momentum Health
2.707 million beneficiaries 676 785 beneficiaries 257 371 beneficiaries
3 BIGGEST PRIVATE HEALTHCARE GROUPS IN SOUTH AFRICA (AS OF APRIL 2018)
Life Health Group Mediclinic International Netcare Limited
Market cap R 40.68 b’n Market cap R 78,69 b’n Market cap R 41.46 b’n
Source: Gray A, Vawda Y. Health Policy and Legislation. In: Padarath A, Barron P. South African Health Review (2017). Online. McIntyre, D., Ataguba, J.
(2016). Access to quality health care in South Africa. University of Cape Town. Bohpehlo Health. (2018). Online. fin24, (2017). Online.
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HEALTHCARE OPPORTUNITIES
Analysts state that the private healthcare and health insurance industries – in partnership with governments and technology – can dramatically
transform healthcare in Africa. While this offers a huge opportunity for new developments, innovation is thin on the ground. Consumers are at the
centre of healthcare, and new business models that depend on collaboration are required.
The South African doctor-to-population ratio is estimated 0.77 per 1 000. However, due to the vast proportion of general practitioners (70%) prac-
tice in the private sector the ratio is estimated more realistically as 1:4200. As the saying goes, “desperate times call for desperate measures” and
alternative means of diagnosis and treatment are most definitely required!
Studies confirm the notion that emerging economies usually give rise to innovation more readily than developed ones. Due to the fact that devel-
oped nations have more entrenched, regulated healthcare systems, less-developed countries adopt solutions generated by new disruptive forces
more quickly.
In South Africa, technological barriers to entry in the medical field are negligible, with private sector medical infrastructure being comparable to
international standards. The benefit of a new entrant launching in the South African healthcare market is that their products and services can be
tested in a more receptive market before entering more established markets. South Africa is unique as it provides access to markets similar to
those of other less developed nations, while having the buying power of more developed nations due to it’s private sector.
As the world approaches the ‘virtualisation of care’ – with the bundling of mobile, digital, and wireless offerings – these new entrants will be well
positioned to offer amazing breakthroughs that help surpass healthcare boundaries and enable care anywhere.
According to research conducted in 2015, South African medical aid scheme consumers:
82% of patients are amenable to
non-traditional ways of get-
74% are open to receiving a vir-
tual doctor visit
ting medical attention
55% trust the Internet more than
the doctor
89% of private medical schemes
would support telemedicine
Source: D., Ataguba, J. (2016). Access to quality health care in South Africa. Dr Rolene Wagner for UCT. (2017). Online.
pwc. (2017). Online. The Medical Aid Survey (2015). Online.
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LOCAL MEDICAL TRAINING
Currently there are 9 medical schools in South Africa, one independent and the other 8
housed at various national universities
If medical schools leverage off virtual lecturers and training that mitigates the risk of teaching using
human bodies - the opportunities are endless.
In 2016, there were only 9 293 undergraduate medical students enrolled in South Africa
The competition and demand for placement at medical schools are both incredibly high. As many
as 42 000 applicants compete for as few as 1 800 first-year positions.
The lowest-weighted academic average or threshold for prospective Indian students is
90,86%, white students 87,66%, black African students 83,16% and coloured students 75,5%
Stringent entry requirements combined with race quotas mean that there are too few places for
students. The discrepancy between applicants and uptake is not to suggest that the hopefuls that
are not accepted have failed to meet a standard.
South Africa has lost more than US$2 billion in investment from the emigration of domestically trained doctors. The high quality of medical training
in South Africa makes the country’s doctors attractive to other countries. This, coupled with the medical industry’s slow reform – such as the de-
cade-long wait for the implementation of the national health insurance scheme – explains the occurrence. However, it additionally demonstrates
that there is a demand for medical professionals trained to a certain standard and proves that South Africa has the means of producing these in-
dividuals. When the output of new doctors is compared to the demand for positions, it is clear that South Africa could be producing many more
young doctors, and profitably, than it is at present.
HEALTH INDUSTRY – TRAINING BUDGETS OF SELECT MARKET PLAYERS (APRIL 2016 – MARCH 2017)
Company/State Enterprise Total Training Budget Number of Employees Allocation per Employee
Department of Health R5 082 000 1837 R2 766.47
Life Health Care R133 000 000 15 560 R8 547.56
Netcare R54 000 000 19 934 R2 708.93
Source: D., Ataguba, J. (2016). Access to quality health care in South Africa.; Dr Rolene Wagner for UCT. (2017). Online.
pwc. (2017). Online. News24. (2017) Online. SAMJ, Medical Schools. (2017).
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SECURITY/MILITARY
SIZE
South Africa has one of the largest private security industries in the
world; It is the fourth largest per capita with South Africans spending
R45 billion per year.
According to the Private Security Regulatory Authority (PSIRA), there are
over 1.87 million registered security officers in South Africa of which
490,000 are active. This number indicates that South Africa’s private se-
curity force has quadrupled between 1997-2015. While the majority of 1997 2015
customers using private security services are businesses, individual us-
ers are beginning to invest more in security systems and the associated
services, therefore the industry continues to grow.
DEVELOPMENTS
In response to the rapidly expanding market, private security com-
panies are extending their operations. Some companies are adding
high-quality security vehicles to their arsenal, complete with automatic
license plate recognition, facial recognition, and other advanced fea-
tures. In addition to more providers entering the industry, South Africa
is also seeing an increase in the number of start-ups entering the secu-
rity market. These new entrants are leveraging IT technology to provide
security solutions for businesses and indiviuals, creating a highly com-
petitive market.
TRAINING/SIMULATION
There is a great deal of potential for VR in the private security industry. It is already being used in military training for similar skills required by pri-
vate security officers. VR training allows one to be immersed in a 3D environment relevant to the subject matter at hand. For high-risk professions
such as security, this allows for a safer training experience that still provides authentic expectation for the situations staff might encounter. For
such a large industry, which is still growing, this makes training faster and affordable for each new intake. While the VR equipment used specifi-
cally for military training is extremely expensive, new VR applications are becoming more affordable and therefore more accessible as a training
tool. The private security industry is also making increased use of technological developments for surveillance and response. These could be new
to seasoned officers and VR could ensure they are trained effectively and efficiently in order to use these new developments to their advantage.
The South African private sector is lucrative but high-risk, this combination would drive demand for innovative training solutions to keep both em-
ployees and the people they protect, safe.
Sources: BizCommunity, 2017; Business Tech, 2017; Daily Maverick & Chronicle, 2017; Wired, 2017; Unimersiv, 2017
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MINING
Whatever the outcome of renewed deliberations around the future of South African mining, efforts to ensure a
sustained growth path are vital to the livelihoods of communities that depend on the industry.
Gold Rush in Transvaal 1886
1899 South Africa produces 25% of the world’s gold
Mining contributes 21% of South African GDP 1980
2004 Mineral and Petroleum Resources Development Act
(MPRDA) came into effect, but was terribly inconsistent,
replaced ownership rights with licences, and seriously
New Mining Charter 2010 affected investor confidence, as a result the value of the
New Mining Charter imposed obligations on indus- mining industry in South Africa fell.
try and none at all on labour nor government
2012 The nationalisation of mines question was addressed by
SIMS which advised against wholesale nationalisation, as
it would be “unaffordable” if accompanied by market-value
compensation, and “unconstitutional” if not state Interven-
2013
A bill to amend the MPRDA has been under review and tion in the mining sector.
discussion in parliament. The Bill Amendment couldn’t
pass as it was as it encroaches upon South Africa’s in-
terntional obligations as a member of the World Trade
2017
Organisation, the granting of such wide (legislative)
powers to the Executive would likely violate the consti-
tutional doctrine of the separation of powers 2018 Newly elected South African President
Cyril Ramaphosa puts a total hold on
the Mining Charter.
The numerous changes in mining legislation and the practice of the industry in South Africa make it an fascinating industry for investors to monitor.
Transformation and the development of black-owned mines remains one of the central goals of the current government. With new mine owners
coming into the field, and with new regulations due to be released by June 2018 – as promised by Mineral Resources Minister Gwede Mantashe –
opportunities and crises could be cropping up all over the sector in no time at all. More mines and additional miners mean increased opportunity
for training. New and updated legislation means further training or alternative methods will be needed. Less experienced mine superiors will rely
heavily on third parties to help expedite processes involved in inducting new workers and initiating business procedures.
Source: Forbes, (2018). Online; Mining Review, (2018). Online; StatsSA, (2016). Online.
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Copyright © 2018 IQbusinessIQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
LOCAL MINING INDUSTRY
The national Q4 2017 GDP results, published in March 2018, indicated that the mining and quarrying industry de-
creased by 4,4% and contributed -0,3 of a percentage point to GDP growth. However, mining remains a vital sector in
South Africa.
Mining contributes to about 8% of GDP in South Africa
In 2016, the mining industry reported sales of over US$ 30 billion
Since 2014, it has contributed R18 billion to the South African economy
Around 490 000 individuals work in the mining industry, with a trickle down supporting around 4.5 million
people. Based on the companies in the table below the potential training budget for mining in South Africa
is R4.8 billion at an average of R9797 per employee.
On average one South African mineworker dies every work day. Such high occurrence of accidents is often attributed to ineffective and inappropri-
ate training methods and materials. Skills and safety training is required by legislation and South African mines are expected to have International
Organization for Standardization (ISO) certification and Mining Qualifications Authority (MQA) accreditation in order to ensure the quality of miner
training and to prevent deaths. As such, mining companies invest large amounts of time, money and resources into training initiatives, and are
subjected to regular audits to check compliance.
The application of VR in providing a typical and realistic underground environment would be incredibly useful in the South African mining indus-
try. Considering that much of the South African mining workforce is illiterate or not formally educated, VR also bridges learning gaps by being both
visual and auditory. The plethora of training applications in which VR can be of use within mining represents a huge developmental opportunity.
MINING SECTOR – TRAINING BUDGETS OF SELECT MARKET PLAYERS (2017)
Company/State Enterprise Total Training Budget Number of Employees Allocation per employee
African Rainbow Minerals R180 000 000 24 106 R7 467,02
Harmony Mines R409 000 000 35 300 R11 586,40
Implats R548 000 000 53 000 R10 339,62
Sources: News24, (2018). Online; StatsSA, (2018). Online; History of mining StatsSA, (2016). Online; Squelch, A. (2001). Vir-
tual reality for mine safety training in South Africa. The Journal of The South African Institute of Mining and Metallurgy
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MANUFACTURING
StatsSA reports that the manufacturing industry remains one of the biggest drivers of the economic growth that South Africa enjoyed at the end
of 2017. Key contributors include the sub-sectors producing chemicals, as well as wood and paper, which altogether account for 36.2% of overall
manufacturing output.
In 2016, capital expenditure declined in real terms, and investment spending in manufacturing only expanded by 0.6%. Research also shows that
only 80% of the installed manufacturing capacity of South Africa is currently being utilised.
On the back of this, the inauguration of President Cyril Ramaphosa in February 2018, caused many industry experts, analysts and economists being
decidedly more optimistic about a ‘new dawn’ for South African manufacturing.
“The President’s State of the Nation address demonstrated
inspirational, unifying leadership of the kind that the South
African manufacturing sector has sorely lacked over the
past few years” – Kaizer Nyatsumba, CEO Steel and Engineering Industries Federation of Southern Africa (Seifsa)
However, the fact remains that South Africa suffers from a severe skills According to the Manufacturing, Engineering and Related Services Sec-
shortage in a number of key economic sectors. With the Fourth Indus- tor Education and Training Authority (MerSETA), the shortage of highly
trial Revolution upon us, South Africa continues to produce too few skilled individuals contributes to:
engineers, artisans and technicians to achieve the National Develop- • slow adoption of technology
ment Plan’s long-awaited R845 billion strategic infrastructure projects. • lower productivity
• low competitiveness
Developing and retaining key technical skills is essential if South Africa • high production costs
is to meet the challenge of building massive new infrastructure, while
simultaneously upgrading existing services. Necessary investments in
technology are required to address these issues.
Sources: Productivity SA, (2017). Online; Cramer’s Engineering News, (2018). Online; StatsSA, (2018). Online.
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MANUFACTURING
The manufacturing sector offers the greatest potential for job cre- Manufacturing accounted for 11% of all formal sector employment in
ation at respectable pay levels for unskilled and semi-skilled workers. 2016, having decreased from 12,6% in 2015. However, other sectors re-
Broadly, these workers fall into the following South African Manufac- corded greater employment losses over this period.
turing sub-sectors:
• Agriprocessing Fiercely competitive pressures in the face of weak demand forced man-
• Automotive ufacturers to reduce employment levels since the Q1 of 2008. The sec-
• Chemicals tor has been experiencing negative growth in employment over the
• ICT and electronics past decade, from over 2 million in 2008, to approximately 1.7 million
• Metals employees in 2017.
• Textiles, clothing and footwear
Almost every one of the jobs in manufacturing in South Africa, regardless of sub-sector, requires employees to learn in a hands-on practical man-
ner, often working with dangerous or expensive machinery. Virtual training mitigates the hazard and cost of training manufacturing sector work-
ers on real machinery, and negates the lengthy and costly process of acquiring such equipment. Incorporating this kind of training into Technical
and Vocational Education and Training (TVET) Colleges and Universities makes this type of quality training accessible to South African students and
practitioners. For investors, the need for new artisans and technicians being experienced in the country – specifically those with skills capable of
bridging existing gaps – presents an exciting opportunity.
MANUFACTURING SECTOR – TRAINING BUDGETS OF SELECT MARKET
Company/State Enterprise Date of Research Finding Total Training Budget Number of Employees Allocation per employee
Pick n Pay 2017 R322 500 000 52 900 R6 096,41
Woolworths 2017 R116 000 000 44 520 R2 605,57
Foschini Group 2016 R125 000 000 22 800 R5 482,46
Sources: Productivity SA, (2017). Online; Cramer’s Engineering News, (2018). Online; StatsSA, (2018). Online.
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Copyright © 2018 IQbusinessIQBUSINESS - VIRTUAL REALITY - WHY SOUTH AFRICA AND WHY NOW?
CONCLUSION
PROOF OF CONCEPT PREDICAMENT IN SOUTH AFRICA
One of the major challenges pertaining to the adoption of VR is attributable to lack of awareness
and therefore lack of demand. Content providers are reluctant to invest resources in developing
content without having an established base of consumers. Furthermore, industry players are
hesitant to purchase technology offerings without functional content that enables the full VR
experience. A positive partnership of both technology and content providers is equired to drive
market adoption.
“ Virtual Reality is the first step in a
grand adventure into the landscape “
of the imagination.
Frank Biocca
WHAT NEXT?
It is up to South African companies to adopt VR software timeously in order to leverage the vast
array of opportunities to apply VR within their industries. It would be wise and extremely
beneficial for industry partners to immerse themselves into VR while the trend is in its infancy as
VR is going to be vital to establishing market share and crucial to contributing to positive change
in industries. VR is here, VR is now, VR is real.
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